The evolution of the macroeconomic cycle is shifting from expansion driven by new increments to an era dominated by existing stock. Over the past four decades of reform and opening up, China's economy has achieved remarkable success globally, with its economic scale, manufacturing capacity, and growth in household income ranking among the top worldwide. However, as the economy continues to expand—current GDP has reached approximately 140 trillion yuan—China has substantially entered a new phase where the stock economy plays a leading role. During this stage, the marginal impact of new increments on the fundamental stock base is gradually diminishing. It is an objective economic规律 that potential growth rates tend to moderate once an economy reaches a certain size; for instance, developed nations with deeply aging populations often see average annual GDP growth around 2%. Consequently, China has proactively adjusted its GDP growth target to a range of 4.5% to 5%, reflecting an adaptation to this macroeconomic trend and a strategic pivot towards enhancing the quality of economic growth. Therefore, "optimizing existing assets" holds significant strategic importance in current macroeconomic policy.
The Chinese economy currently faces complex challenges intertwined with cyclical, structural, and institutional issues. Cyclically, the ongoing downturn in the real estate sector significantly impacts the broader macroeconomy. Structurally, imbalances exist between investment and consumption, as well as between domestic and external demand. There is room for improvement in the coordination of fiscal and monetary policies and in central-local fiscal relations, alongside underlying risks from excessively rapid debt expansion. China's macro leverage ratio has now exceeded 300% and is accelerating, surpassing both the rate of increase and the absolute level seen in most developed economies, making the proper resolution of debt risks an urgent priority. Simultaneously, issues of oversupply stemming from "strong supply and weak demand" are becoming increasingly prominent. Traditional manufacturing, previously large-scale infrastructure investments (such as high-speed rail, highways, and shipping), and the commercial housing market all face challenges of overcapacity or underutilization. More critically, population aging not only directly dampens demand for real estate and overall consumption but also加重es government debt and fiscal burdens. Estimates suggest that general budget expenditures to cover social security gaps are rising annually and are projected to exceed 4 trillion yuan by 2030. This leads to a被动 shift in fiscal expenditure structure: from an "investment-oriented fiscal policy" previously focused on infrastructure to a "subsistence fiscal policy" ensuring basic livelihood needs like social security, education, and employment—a trend expected to persist in the coming years. Furthermore, the number of flexible workers in China has reached 287 million, accounting for about 40% of total employment. With the full advent of the AI era, structural pressures on future employment cannot be underestimated.
Addressing these issues requires correcting misconceptions about political performance metrics and re-evaluating the logic behind investment and consumption. It is crucial for society to form a clear consensus on the current cyclical, structural, and institutional dilemmas. The long-standing emphasis has been on "letting consumption play a fundamental role in economic development and investment a key role." However, in practice, local governments, driven by the need to "stabilize growth," often rely heavily on investment. This is because consumption is a "slow variable" influenced by expectations and income, whereas investment can be rapidly boosted through administrative measures. Over time, this has led to an abnormally high dependence on investment for China's economic growth. Currently, investment contributes over 40% to GDP, whereas the global average for capital formation is typically around 20%. Even as fixed-asset investment growth turned negative last year for the first time, the market's initial reaction was still to call for "stabilizing and rebounding investment." Yet, a blind pursuit of stabilization is risky. The structure of investment must be scrutinized: should advanced manufacturing be stabilized, or traditional manufacturing and real estate? From an economic logic perspective, investment represents aggregate demand in the short term, transforms into supply in the medium term, and can easily lead to overcapacity in the long run. Sacrificing long-term stability for short-term GDP growth违背s the original intention of high-quality development. A recent article in *Qiushi* pointed out: "As the marginal return on infrastructure investment continues to decline, China's incremental capital-output ratio has increased from 2.84 in 2008 to 9.44 in 2023." This means that the investment required to generate one additional yuan of GDP has risen from 2.84 yuan to 9.44 yuan.
In response to current macroeconomic pain points, there remains substantial room to optimize existing assets. Specific measures can be pursued along four dimensions: First, issue central government special bonds to refinance local high-interest debt. Given the massive scale of local government debt and heavy interest burdens, reducing interest expenses is paramount amid slowing economic growth and an aging population. In reality, some local governments face borrowing costs as high as 10% for overseas bonds. It is advisable to increase the issuance of low-cost (around 2%) special central government bonds (or refinancing专项bonds) to replace local debt, effectively mitigating local government debt risks. Second, revitalize state-owned assets through market-oriented mechanisms. The price-to-book ratios of many state-owned enterprises and listed companies have fallen below 1. For such assets, it is essential to further解放思想 and employ market-based methods for optimization. For example, consider transferring部分state-owned equity at no cost to the National Social Security Fund, which operates with a higher degree of market orientation. Simultaneously,适度relax rigid constraints such as "state-owned equity transfers must not be below net asset value," allowing chronically underperforming SOEs to introduce market-based trusteeship mechanisms. This could involve appointing professional managers through competitive processes to enhance operational efficiency. Third, broaden investment channels and unleash the potential of high-end consumption. A矛盾exists between "low consumption growth" and "high household deposits" (household deposit balances have reached 170 trillion yuan). On one hand, there is a need to provide diverse, high-quality investment avenues for substantial household savings. On the other hand, it is necessary to break conceptual barriers and actively encourage the development of service-oriented and high-end consumption (for instance, drawing on international experience to develop industries like yacht tourism) to meet the consumption demands of high-income groups. Fourth, deepen reforms in the fiscal-taxation system and national income distribution. Accelerate the establishment of a unified national market to facilitate the cross-regional, market-driven flow of production factors. Within the fiscal system, the annual central-to-local transfer payment volume exceeds 10 trillion yuan, which is relatively large. Given trends of declining total population and changing regional population flows, it is recommended to structurally optimize and适度reduce these transfers.部分central funds currently used for transfers could be more precisely allocated to fill social security gaps or directly targeted as transfers to specific low-income and impoverished populations, addressing structural pain points at their root.
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